Long Overdue: Assessing the State of Canada’s Infrastructure Deficit

Rohan Balram

Every day, over 6,000 commuters travel to and from central Toronto by the Gardiner Expressway. Although the Gardiner is clearly a key piece of transportation infrastructure, it has been left to deteriorate for more than a decade. Despite reports of falling debris every winter, most government action has manifested itself in scattered efforts of deliberation. Toronto’s Public Works Committee only recently took its first meaningful steps toward addressing the Gardiner with the announcement of a $1 billion refurbishment plan.

gardiner_expressway_downtown_toronto

If the solution to the Gardiner’s deterioration is as simple as spending money, why did it take over a decade for the municipal government to act? Especially given the dangers that such conditions pose to the public. The answer – municipal governments simply do not have the fiscal capacity to sufficiently fund such large infrastructure projects. As a result, the Gardiner Expressway is only one of countless neglected infrastructure challenges. Together, these challenges are known as the “infrastructure deficit.”

Formally, infrastructure embodies the physical and organizational arrangements of structures which facilitate the functioning of our society. At the micro-level, infrastructure is defined by its contributions to our individual lives on a daily basis. For instance, the three buses that an individual depends on to travel to work, or the electricity a family uses to cook dinner are all components of our infrastructure. Infrastructure is important because it enables the tangible, lived experiences we share every day. Taking such experiences into consideration, it is quite apparent that infrastructure plays a key role in our lives. Nonetheless, Canada has fallen behind in maintaining its infrastructure, and our deficit has been valued at more than 123 billion dollars.

The terms in Section 92(8) of the Constitution outline the present relationship between municipalities and higher levels of government. According to these terms, provinces have the discretionary power to assemble and empower municipalities. This arrangement was not an issue for much of the twentieth century because municipal governments received support in the development of highways and suburban residences. However, following the suburban boom of the 1950s, Canadian municipalities were left with the burden of maintaining infrastructure as the federal government, and to a lesser extent provincial governments, withdrew their contributions.

Most recently, the Trudeau government proposed a 120 billion dollar plan to respond to Canada’s infrastructure deficit. While the plan appears to address the $123 billion deficit estimate almost perfectly, only 10% of it has been allocated. This means that the plan’s long-term goals are not concrete enough to confidently show that the deficit will be fully resolved in ten years. Furthermore, there has been speculation as to how funding will be secured, with claims that funding will mostly come from the sale of public assets/businesses.

The sale of public assets will surely generate large sums of money quickly, but what are the long-term effects of such a compromise?

The main flaw of the Trudeau government’s proposed plan is that it will be heavily dependent on the sale of public assets for funding. The sale of public assets will surely generate large sums of money quickly, but what are the long-term effects of such a compromise? Also, how will future phases of the plan be funded, if we must resort to such a simple revenue source so early on in the process? Private firms are the main beneficiary to this arrangement, since they are able to obtain public assets from which they will surely profit. In turn, the government will benefit in the short-term from the sale of these assets. Eventually, however, it will need to solve the problem of recuperating the lost revenue that these assets brought year after year.

Canada is not alone in its infrastructure issues. Many countries suffering from the same circumstances have taken alternative steps to address their own infrastructure deficits. For example, the UK regularly utilizes public-private partnerships wherein a group of willing private firms build an infrastructure project, operate it for a contracted period of time, and then transfer the facility to the government at the end of the term. Under this model, firms bear the majority of up-front costs while also profiting over the term’s duration. Public-private partnerships are also prevalent in Canada, albeit to a lesser extent.

One problem associated with public-private partnerships is that the amount of money the government contributes to the overall development and operation of the project sometimes exceeds the cost of carrying out the project independently. This, of course, is the trade off for convenience. As such, public-private partnerships are not necessarily a perfect substitute for the sale of assets. Instead, the two should be considered complementary in diversifying revenue streams.

The federal government’s eagerness to raise revenues quickly seems to suggest that it’s more concerned with frivolously addressing the infrastructure deficit, rather than effectively fixing it.

More broadly, Canada could benefit from following a more sustainable model of infrastructure policy, akin to the Netherlands. The Dutch government has avoided the infrastructural challenges faced by nations such as Canada by having a national infrastructure plan in place since the 1960s. While the Dutch government does not oversee all infrastructural development, its heavy involvement in transportation infrastructure has minimized the burden municipalities face. The Dutch are conscious of infrastructure’s impact on global issues such as trade, and consider infrastructure to be a priority for all levels of government.

Canada’s infrastructure deficit has amassed over several decades and, ultimately, will take a considerable amount of time to resolve. Still, the federal government’s eagerness to raise revenues quickly seems to suggest that it’s more concerned with frivolously addressing the infrastructure deficit, rather than effectively fixing it. The Trudeau government must focus on introducing a conjunctive long-term infrastructure plan like the Netherlands, coupled with a long-term funding strategy in order to truly solve the infrastructure deficit. Their goal should be to address the infrastructure deficit through meaningful long-term collaboration between all levels of government. Unfortunately, Trudeau’s proposed plan simply does not reflect this.

Rohan Balram is a Master of Public Policy candidate at the University of Toronto’s School of Public Policy and Governance. He holds an Honours Bachelor of Arts degree in Public Policy and City Studies from the University of Toronto. His policy interests include social policy, urban development, and education.

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One response to “Long Overdue: Assessing the State of Canada’s Infrastructure Deficit

  1. Pingback: The Constant Gardiner – Infrastructure in Toronto & Canada – March 1st, 2017 | The Public Policy & Governance Review·

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